Case analysis
Radio Frequency Identification (RFDI) has developed to become a transforming factor in supply chain management (Ma & Weng, 2013). RFID is the solution for connecting information models with elements in the physical world. RFDI utilizes radio waves or optics thus offering various advantages over the barcode system. RFID technology ensures that goods are delivered to the right place without errors. Since real-time information is provided, administration and planning activities can be achieved effectively.
Advice to Bob
I would advise Bob to show that RFID is a complex technology and incorporating it needs careful selection of the right technology from the available sets of choices that include passive vs. active and HF vs. UHF. However, it would be more enlightening if Bob could provide the costs of integrating this technology into the ASCI systems. Bob should also insist on the competitive aspect of RFID technology. This aspect provokes Scott to create the desire to try this new technology. Besides the many benefits linked to cost reduction, Bob should also emphasize the potential of the RFID to cut on theft cases.
Advice to Scott
I would advise Scott to consider the use of RFID technology. This aspect would ease the workload in the supply chain management that is currently complex and knowledge-intensive. The RFID makes the supply chain more precise and time conscious and makes the entire supply chain reliable (Ma & Weng, 2013). The market for Alaska Supply Chain Integrators (ASCI), which is the oil company goods, is one of the fastest-growing and competitive markets.
In the ASCI Company, goods have to be counted repeatedly during the production phase, cleaning, and packaging. By deploying RFID readers, goods can be counted accurately and in a few seconds. This accuracy and speed are attributed to the fact that RFID tags are automatically scanned without having to remove them from the packages to be sensed by the RFID scanner. Besides, multiple tags can be scanned concurrently. For ASCI, this presents the best model for cost reductions because labor-intensive work can be handled swiftly and efficiently.
Moreover, ASCI can also take advantage of the increased information compiled with the aid of the RFID devices. For example, RFID tags can capture more data than the usual barcode labels. This additional information provides an added advantage since it can be utilized to maximize production (Ma & Weng, 2013). RFID’s increased information can also help ASCI to identify needed repairs and maintenance of their facilities.
Additionally, this information can allow ASCI to increase visibility into vital data such as which repairs have been made and at what date. This information can assist ASCI to predict maintenance dates. Consequently, maintenance is integrated into production schedules, which assists in the avoidance of costly production failures.
The basis for determining the price of the COG
The costs of the manufacturing process, warehouse management, tracking and managing of shipping facilities, and the cost of distribution determine the final price that is paid by consumers. The most appropriate way for ASCI to transport large quantities of products is through shipping containers. This means of transport is most preferred because it offers relatively cheap services and the safety of cargo. Firms that deploy RFID technology in the tracking of transport containers can keep track of the cargo in every stage of the supply chain (Ma & Weng, 2013). RFID container tracking provides visibility of actual time shipment, increases efficiency, and improves accuracy.
The implementation of RFID in the ASCI supply chain will bring plenty of benefits to the distribution process. When the speed and accuracy of distribution are improved, this translates to a reduction of the distribution costs.
During shipping of goods marked with the RFID tags, when they reach a distribution zone the RFID system records the necessary data at the entry point. This information is used to facilitate the sorting and dispatch of the products to the retailing regions within a short duration and with high accuracy. These processes save many costs that are redistributed along the supply chain and retailers benefit from the reduced costs in the supply chain.
Savings that could be realized with an RFID system
When the RFID system is used, savings are experienced right from the manufacturing stage. Utilizing an RFID system reduces costs; less manual labor is used, and planning during manufacturing is improved. The warehouse also experiences various benefits that include quick locating of goods, visibility of precise real-time information, and the potential to plan product location precisely (Ma & Weng, 2013).
Keeping track of a large consignment is tasking and time-wasting. Thus, ASCI can implement RFID to ease the condition by improving the cargo flow. When a stock is timely and accurately monitored, the cost is reduced substantially. A few workers in the distribution sector can take other roles since no much labor is needed for supervision or counting of products. Consequently, orders reach customers at the right time minimizing chances for delays and loss of value. The evident benefits show that RFID is worth the investment regarding both short-term and long-term cost-saving.
Reference
Ma, C., & Weng, J. (2013). Radio Frequency Identification System Security. Amsterdam, Holland: IOS Press.